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The Gospel of Consumption
And the better future we left behind
Jeffrey Kaplan, Orion
... despite the apparent tidal wave of new consumer goods [in the 1920s] and what appeared to be a healthy appetite for their consumption among the well-to-do, industrialists were worried. They feared that the frugal habits maintained by most American families would be difficult to break. Perhaps even more threatening was the fact that the industrial capacity for turning out goods seemed to be increasing at a pace greater than people’s sense that they needed them.

It was this latter concern that led Charles Kettering, director of General Motors Research, to write a 1929 magazine article called “Keep the Consumer Dissatisfied.” He wasn’t suggesting that manufacturers produce shoddy products. Along with many of his corporate cohorts, he was defining a strategic shift for American industry-from fulfilling basic human needs to creating new ones.

... By the late 1920s, America’s business and political elite had found a way to defuse the dual threat of stagnating economic growth and a radicalized working class in what one industrial consultant called “the gospel of consumption”—the notion that people could be convinced that however much they have, it isn’t enough. President Herbert Hoover’s 1929 Committee on Recent Economic Changes observed in glowing terms the results: “By advertising and other promotional devices . . . a measurable pull on production has been created which releases capital otherwise tied up.” They celebrated the conceptual breakthrough: “Economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied.”

Today “work and more work” is the accepted way of doing things. If anything, improvements to the labor-saving machinery since the 1920s have intensified the trend.

... We can break that cycle by turning off our machines when they have created enough of what we need. Doing so will give us an opportunity to re-create the kind of healthy communities that were beginning to emerge with Kellogg’s six-hour day, communities in which human welfare is the overriding concern rather than subservience to machines and those who own them. We can create a society where people have time to play together as well as work together, time to act politically in their common interests, and time even to argue over what those common interests might be. That fertile mix of human relationships is necessary for healthy human societies, which in turn are necessary for sustaining a healthy planet.
(May/June 2008 issue)

The Coming Collapse of the Middle Class (video)
Elizabeth Warren, University of California - Berkeley via YouTube
Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America's credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class. Series: "UC Berkeley Graduate Council Lectures" [6/2007]
(21 January 2008)
Devastating talk by a mild-mannered academic. If the general public understood these ideas, there would be rioting in the streets. See the articles and excerpts below to get the gist of Warren's ideas.

Online articles by/about Warren:
The Middle Class on the Precipice (Harvard Magazine) - SEE BELOW
What’s Hurting the Middle Class (Boston Review)
Middle-class income doesn't buy middle-class lifestyle (Harvard U. Gazette)

The Middle Class on the Precipice
Elizabeth Warren, Harvard Magazine
During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.

Middle-class families have been threatened on every front. Rocked by rising prices for essentials as men’s wages remained flat, both Dad and Mom have entered the workforce—a strategy that has left them working harder just to try to break even. Even with two paychecks, family finances are stretched so tightly that a very small misstep can leave them in crisis. As tough as life has become for married couples, single-parent families face even more financial obstacles in trying to carve out middle-class lives on a single paycheck. And at the same time that families are facing higher costs and increased risks, the old financial rules of credit have been rewritten by powerful corporate interests that see middle-class families as the spoils of political influence.

... It would be convenient to blame the families and say that it is their lust for stuff that has gotten them into this mess. Indeed, sociologist Robert Frank claims that this country’s newfound “Luxury Fever” forces middle-class families “to finance their consumption increases largely by reduced savings and increased debt.” Others echo the theme. A book titled Affluenza (by John De Graaf, David Wann, and Thomas H. Naylor) sums it up: “The dogged pursuit for more” accounts for Americans’ “overload, debt, anxiety, and waste.” If Americans are out of money, it must be because they are over-consuming—buying junk they don’t really need.

... But is this argument true? If families really are blowing their paychecks on designer clothes and restaurant meals, then the household expenditure data should show them spending more on these frivolous items than ever before. But the numbers don’t back up the claim.

A quick summary of the data from the Bureau of Labor Statistics’ Consumer Expenditure Survey paints a very different picture of family spending.

... So where did their money go? It went to the basics. The real increases in family spending are for the items that make a family middle class and keep them safe (housing, health insurance), that educate their children (pre-school and college), and that let them earn a living (transportation, childcare, and taxes).

... Fully 75 percent of family income is earmarked for recurrent monthly expenses. Even if they are able to trim around the edges, families are faced with a sobering truth: every one of those expensive items—mortgage, car payments, insurance, childcare—is a fixed cost. Families must pay them each and every month, through good times and bad; there is no way to cut back from one month to the next, as can be done with spending on clothing or food. Short of moving out of the house, withdrawing their children from preschool, or canceling the insurance policy altogether, they are stuck.

In other words, today’s family has no margin for error. There is no leeway to cut back if one earner’s hours are cut or if the other gets sick.
(January-February 2006)

Asian leaders issue poverty warning
Reuters via IHT
Soaring food prices may throw millions of people back into poverty in Asia and undo a decade of gains, regional leaders said Sunday while calling for increased agricultural production to meet rising demand.

Asia - home to two-thirds of the world's poor - risks rising social unrest as a doubling of the price of wheat and rice in the past year has hurt people spending more than half their income on food, Fukushiro Nukaga, the Japanese finance minister, said during the annual meeting of the Asian Development Bank.

If food prices rise 20 percent, 100 million poor people across Asia could be forced back into extreme poverty, the Indian finance secretary, D. Subba Rao, warned. "In many countries that will mean the undoing of gains in poverty reduction achieved in the past decade of growth," Rao said at the bank's meeting in Madrid.

A 43 percent rise in global food prices in the year ended in March set off violent protests in Cameroon and Burkina Faso as well as rallies in Indonesia following reports of starvation deaths.
(4 May 2008)